China's economy picked up further pace in the third quarter of 2026, data released by the National Bureau of Statistics on October 19 showed, beating market expectations and adding to confidence that the country can hit its full year growth target.
Third quarter GDP grows 4.5 percent
Gross domestic product expanded 4.5 percent year on year in the third quarter, up from 4.3 percent in the second quarter, the data showed. Growth for the first nine months of the year came in at 4.6 percent, within the government's 4.5 to 5 percent full year target range. Mao Shengyong, deputy head of the National Bureau of Statistics, said improving domestic demand and the release of new growth drivers were key to the faster pace.
Industrial output and high-tech manufacturing stand out
Value added industrial output among enterprises above designated size rose 5.1 percent year on year in the third quarter, up 0.4 percentage points from the second quarter. Over the first nine months, value added output from equipment manufacturing grew 10.2 percent year on year, while high-tech manufacturing grew 14.3 percent, both well ahead of industrial output overall.
Consumption and investment diverge
Total retail sales of consumer goods rose 1.1 percent year on year in September, up from 0.4 percent in August, while fixed asset investment fell 7.2 percent year on year over the first nine months. The GDP deflator rose 1.5 percent year on year in the third quarter, the bureau's data also showed.
New growth drivers account for over 40 percent of growth
Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, Wang Jiaqiang, a senior researcher at the Bank of China Research Institute, Chen Mengyun, a macroeconomic analyst at Shenyin and Wanguo Futures, and Guo Liyan, deputy director of the Economic Research Institute at the Chinese Academy of Macroeconomic Research, all pointed to advanced manufacturing, the digital and intelligent economy, and modern services as new growth drivers that accounted for more than 40 percent of third quarter growth. Rogier Janssens, president of Merck China, also offered a corporate perspective on the Chinese market.
Policy attention turns to advanced manufacturing and fourth quarter investment
A national conference focused on advanced manufacturing was held in Beijing in September, emphasizing the push to build a modernized industrial system. Several analysts said that with the fourth quarter construction window underway, stabilizing investment and coordinating fiscal and financial support for consumption are likely to be the next areas of policy focus.
